Universities should be means-tested so that public funds can be diverted from the richest universities to the poorest, lecturers' union Natfhe has said.
The "Robin Hood" solution is mooted in Natfhe's submission to the Treasury's comprehensive spending review. It says: "If it is right to means-test students, or pensioners, or others, then why not means-test institutional recipients of state funding?"
The proposal sparked criticism from rival lecturers' union, the Association of University Teachers, which represents staff in the older, and usually richer, universities. Spokesman Andrew Pakes said the Robin Hood principle would "not serve the sector well".
The AUT spokesman said: "Institutions have to be more open and accountable and there have been ill-thought-out management decisions where reserves are built up or money is spent on capital projects that mean redundancies down the road. But the solutions lie only partly with the sector - the emphasis is on the Treasury to increase investment in the sector as a whole."
Natfhe's submission, published this week, says: "The same funding regime applies to all HEIs regardless of their wealth. Yet it is widely known that a very small number are comparatively wealthy. Oxford and Cambridge alone hold over a quarter of the financial assets of the entire UK higher education system... It is hard to persuade the public or the Treasury of the need to increase higher education funding when some of that will automatically go to relatively wealthy institutions."
Natfhe accepts that means testing might deter potential donors and benefactors. But, it says, "one approach might be to exempt from means-testing any funds or donations which were for purposes such as improving access, scholarships for the disadvantaged, summer schools and other similar programmes".
Natfhe says that a first step "might be to make the receipt of public funds conditional on a full and transparent publication of all financial assets".
Natfhe also warns that higher education was facing "acute problems" and required at least £900 million extra a year to prevent a devastating decline in the sector.